Which of the Following Will Reduce the Risk Accompanying Equity

question 353

Multiple Choice

Which of the following will reduce the risk accompanying equity (stock) investments?

• A) the purchase of shares of a mutual fund that holds the stocks of many diverse corporations
• B) the purchasing and holding of equities over a lengthy period of time
• C) the purchase of shares in firms doing business in a wider variety of industries and markets
• D) all of the above

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Definitions:

Tax Incidence

The analysis of the effect of a particular tax on the distribution of economic welfare among entities in the economy.

Rational Choice Theory

An economic theory that assumes individuals always make prudent and logical decisions that provide them with the highest amount of personal utility.

Public Interest

The well-being of the general public, often considered within the context of government policy-making.

Tax Incidence

The analysis of the effect of a particular tax on the distribution of economic welfare, including who ultimately pays the tax.